Reiterates Fiscal 2016
Guidance
On Track to Complete Proposed Merger With
Snyder's-Lance
Diamond Foods, Inc. (NASDAQ:DMND) ("Diamond" or the "Company")
today reported financial results for its fiscal 2016 first quarter
ended October 31, 2015.
First Quarter Fiscal 2016 Highlights
- Net sales were $224.8 million, down $21.8 million, or
8.8%, reflecting:
- $13.0 million from exiting high-volume, low-margin SKUs in the
Nuts segment
- $6.1 million decline mainly in international walnut sales
primarily due to lower net price realization
- $2.6 million of adverse FX in the Snacks segment
- Snacks segment net sales were $115.8 million, down
0.7%
- Nuts segment net sales were $109.1 million, down
16.1%
- Gross margin was 27.1%, compared to 24.1%, an increase of 300
basis points
- GAAP net income was $7.8 million and GAAP diluted EPS was
$0.24
- Non-GAAP net income was $8.8 million and non-GAAP diluted
EPS was flat at $0.28
- Adjusted EBITDA was $30.4 million, down 1.0%
(All comparisons above are to the first quarter of fiscal 2015.
Non-GAAP financial measures are reconciled in the tables
below.)
"We are pleased with our first quarter financial results
overall, which were driven by continued strong gross margin
improvement; net sales, however, were adversely impacted by our
decision to exit high-volume, low-margin nut SKUs and by lower net
price realization in international walnut sales," said Brian J.
Driscoll, President and CEO. "Notably, Kettle U.S. continued to
post strong growth, we started to realize signs of a recovery in
the U.K., and the Emerald brand transition is almost complete with
solid signs of future growth ahead. This progress, combined with
the strength of our new product pipeline, bolsters our optimism
about our sales momentum for the balance of this fiscal year. Our
business remains on track to meet our original annual outlook, and
we remain excited about the future combination of Diamond and
Snyder's-Lance as we work diligently towards a targeted closing in
the first quarter of calendar 2016."
First Quarter Fiscal 2016
Net sales for the quarter were $224.8 million, down $21.8
million, or 8.8%, compared to $246.6 million for the same quarter
of the prior fiscal year. Nuts segment net sales were down $21.0
million. The prior year first quarter included $13.0 million of
high-volume, low-margin nut SKUs that we exited. An additional $6.1
million decline in net sales was due primarily to lower net price
realization in international walnuts. The adverse impact of foreign
exchange rate changes versus prior year, related to sales of snacks
in the U.K. and Canada, was $2.6 million.
Gross profit for the first quarter of fiscal 2016 was $60.9
million, or 27.1% of net sales, compared to $59.4 million or 24.1%,
a 300 basis point improvement over the prior fiscal year. This
increase was primarily driven by increased net price realization in
Diamond of California, Emerald and Kettle in the U.S., as well as
favorable walnut costs. These were partially offset by lower net
price realization in international walnuts, Kettle U.K. and Pop
Secret, higher other tree nut costs and adverse foreign exchange
rates.
GAAP net income for the quarter was $7.8 million. GAAP
diluted EPS was $0.24 in the first quarter of fiscal 2016 compared
to $0.24 for the same quarter in the prior fiscal year. Excluding
certain items described below, non-GAAP net income for the first
quarter of fiscal 2016 was $8.8 million and non-GAAP fully
diluted earnings per share was $0.28, flat compared to the first
quarter of fiscal 2015. Adjusted EBITDA was $30.4 million, compared
to $30.7 million in the prior fiscal year period. The GAAP
effective tax rate was 6.7% for the quarter, and the non-GAAP
effective tax rate was 30.9% compared to 29.8% in the same quarter
last year due to an increase in U.S. pre-tax non-GAAP income
relative to the U.K. Please refer to the table at the end of this
press release for a reconciliation of GAAP to non-GAAP
information.
As of October 31, 2015, net debt outstanding was $637.3
million, 5.0 times last twelve months adjusted EBITDA. The net
availability under the ABL Revolver was $101.3 million.
Segment Review
Snacks Segment: Net sales for the quarter were
$115.8 million, down 0.7% compared to the prior fiscal year
period. The decrease was primarily due to lower net price
realization for Kettle in the U.K. and Pop Secret as well as $2.6
million of unfavorable foreign exchange impact. These decreases
were partially offset by improved net price realization for Kettle
in the U.S. and strong volume growth in Kettle in both the U.K. and
U.S.
Gross profit for the first quarter of fiscal 2016 was $42.3
million, or 36.5% of net sales, compared to $43.0 million, or 36.8%
of net sales in the prior fiscal year period. Gross profit as a
percent of net sales was impacted by the lower Kettle U.K. and Pop
Secret net price realization as well as adverse foreign
exchange rates, partially offset by strong Kettle U.S.
performance.
During the Nielsen 12-week period ended November 21, 2015 in
expanded all outlet channels xAOC, Kettle retail sales in the U.S.
were up 3.3% compared to category growth of 0.8%, resulting in a
gain of 10 basis points of market share; Kettle's core fried chip
retail sales grew 5.8% in the same time period. In the first
quarter, Kettle's U.S. small bag product line grew 27%. Pop Secret
retail sales grew 1.0% despite a category decline of 2.7%,
resulting in 90 basis points of market share gain. Kettle
market share in the U.K. was flat in the 12-week period ended
November 7, 2015.
Nuts Segment: Net sales for the quarter were
$109.1 million, down 16.1% compared to the prior fiscal year
period. The $21.0 million net sales decrease in the quarter
was primarily due to the exit of certain high-volume, low-margin
SKUs that amounted to $13.0 million of sales in the first quarter
last year. An additional $6.1 million decline in net sales was due
primarily to lower net price realization in international walnuts.
These decreases were partially offset by higher net price
realization for Emerald and the balance of the Diamond of
California brand.
Gross profit was $18.6 million, or 17.0% of net sales, compared
to $16.4 million, or 12.6% of net sales, in the prior fiscal
year period. The increase was driven by higher net price
realization for both the Diamond of California and Emerald brands
and lower walnut costs, partially offset by higher other tree nut
costs.
In the Nielsen 12-week and four-week periods ended November 21,
2015 in xAOC, Emerald retail sales were up 6.3% and 20.1%,
respectively out-pacing category growth in both periods. These
results reflect strengthening momentum in the Emerald brand
re-launch. Diamond of California retail sales, excluding the
branded portion of certain high-volume, low-margin nut SKUs that
were exited, were down 2.1% versus comparable category growth of
2.1%.
Outlook
While the Company continues to expect that the proposed merger
will close in the first quarter of calendar 2016, if the Company
were to remain independent for all of fiscal 2016, it would still
expect annual adjusted EBITDA of $131 million to $136 million and
non-GAAP diluted EPS of $1.21 to $1.32. The Company's outlook
excludes the expected merger and includes the following
expectations: input cost inflation of 1% to 2%, productivity
improvements of 2% to 3%, exchange rates of $1.55 per £1.00, $0.75
per C$1.00 for fiscal 2016, a non-GAAP effective tax rate of
between 30% to 32%, stock-based compensation of $10.5 million and
32 million fully diluted shares outstanding at fiscal year-end. The
Company also expects cash tax payments of approximately $1 million,
reflecting the current $348 million tax net operating loss
carryforward.
Fiscal 2016 adjusted EBITDA, a non-GAAP financial measure,
excludes items such as interest expense, income taxes,
depreciation, amortization, stock based compensation, income
associated with the equity investment as well as certain legal
expenses and litigation settlements, Fishers plant closure and
related costs, certain expenses associated with the Emerald brand
packaging transition, merger and acquisition related costs, asset
impairments and certain other actual and projected costs.
Definitive Merger Agreement
On October 28, 2015, Diamond and Snyder's-Lance, Inc.
("Snyder's-Lance") announced that they had entered into a
definitive agreement under which Snyder's-Lance will acquire
Diamond Foods in a cash and stock transaction valued at
approximately $1.91 billion, including the assumption of
approximately $640.0 million of indebtedness. Under the terms of
the agreement, Diamond stockholders will receive 0.775 shares of
Snyder's-Lance common stock and $12.50 in cash, per share of
Diamond common stock upon the closing of the transaction. The
transaction is expected to close in the first quarter of calendar
2016.
About Diamond Foods
We are a snack food and culinary nut company focused on making
innovative, convenient and delicious snacks as well as culinary
nuts true to our 100-year plus heritage. We sell our products under
five different widely-recognized brand names: Diamond of
California®, Kettle Brand® and KETTLE® Chips, Emerald® and Pop
Secret®. Our mission is to honor nature's ingredients by making
food that people love. We are proud of our offerings, many of
which are non-GMO Project verified and free of artificial flavors
and preservatives, and we are committed to making great tasting
products for our consumers. Diamond's products are distributed in a
wide range of stores where snacks and culinary nuts are
sold. For more information, visit the Company's corporate web
site: http://www.diamondfoods.com.
Note Regarding Forward Looking Statements
This press release includes forward-looking statements that are
based on our current expectations and assumptions only as of the
date of this press release. These forward looking statements,
including statements under "outlook" or referred to as "guidance,"
are subject to certain risks and uncertainties that could cause
actual results to differ materially from the potential results
discussed in the forward-looking statements. In particular,
our predictions about our business and our guidance for
adjusted EBITDA and non-GAAP diluted earnings per share, including
expectations regarding segment performance, cost inflation,
productivity improvements, exchange rates, our effective tax rate,
stock-based compensation and fully diluted shares outstanding,
could be affected by a variety of factors including: raw material
headwinds; crop harvests; increasing competition and possible loss
of key customers; risk associated with our operations outside the
U.S., including foreign currency fluctuations; general economic and
capital markets conditions; competitive dynamics in the consumer
foods industry and the markets for our products, including new
product introductions, advertising activities, pricing actions, and
promotional activities of our competitors; progress against the
Company's turnaround plan; unexpected delays or increased costs in
implementing our business strategies; failure to execute and
accomplish strategy; risks relating to our leverage, including the
cost of our debt and its effect on our ability to respond to
changes in our business, markets and industry; loss of key
personnel; the dilutive impact of equity issuances; risks relating
to litigation, including but not limited to merger-related
litigation, and regulatory proceedings; uncertainties relating to
our relations with growers; availability and cost of walnuts and
other raw materials; energy and labor; price competition and
industry consolidation; changes in top retail customer
relationships; weather conditions (climate or otherwise); economic
conditions including, changes in inflation rates, interest rates,
tax rates, or the availability of capital; consumer acceptance of
new products and product improvements; customer and consumer
reaction to pricing actions and changes in promotion levels;
acquisitions or dispositions of businesses or assets; changes in
capital structure; changes in the legal and regulatory environment,
including labeling and advertising regulations and litigation;
impairments in the carrying value of goodwill, other intangible
assets, or other long-lived assets, or changes in the useful lives
of other intangible assets; changes in the accounting standards and
the impact of significant accounting estimates; product quality and
safety issues, including recalls and product liability; changes in
consumer preferences and demand for our products; operating costs
and business disruption that may be greater than expected;
effectiveness of advertising, marketing and promotional programs
and activities and contractual relationships; changes in consumer
behavior, trends and preferences; consolidation in the retail
environment, changes in purchasing and inventory levels of
significant customers; disruption or inefficiencies in the supply
chain; benefit plan expenses; upgrading our information technology
infrastructure, including implementation of a new Enterprise
Resource Planning software planning software platform; failure or
breach of our information technology systems, including those
managed by third parties; inappropriate use of social media; and
political and economic conditions in other countries. Our
expectations regarding the anticipated benefits of the proposed
merger with Snyder's-Lance could be affected by a variety of
factors, including: the time required to complete the proposed
merger; possible failure to receive necessary stockholder
approvals; the risk that a condition to completion of the proposed
merger may not be satisfied; the risk that a regulatory or other
approval that may be required for the proposed merger is delayed,
is not obtained or is obtained subject to conditions that are not
anticipated or that may be burdensome; the anticipated benefits of
the proposed merger to Snyder's-Lance and its ability to
achieve the synergies and value creation projected to be realized
following the completion of the proposed merger; Snyder's-Lance's
ability to integrate Diamond's business with its own promptly and
effectively; the diversion of management and other workforce time
on merger-related issues, including activities of labor unions and
the integration of Diamond employees into Snyder's-Lance; changes
in Snyder's-Lance's or Diamond's businesses, future cash
requirements, capital requirements, results of operations,
revenues, financial condition and/or cash flow; changes in
acquisition-related transaction costs, the amount of fees paid to
advisors and the potential payments to Diamond executive officers
in connection with the proposed merger; operating costs and
business disruption that may be greater than expected; the ability
to retain and hire key personnel and maintain relationships with
customers, providers or other business partners pending completion
of the proposed merger; effects of completion; and the risk that
lawsuits challenging the proposed merger may result in adverse
rulings that may impair or delay completion of the proposed
merger. Risks and uncertainties are discussed in greater
detail in the "Risk Factors" sections of the periodic reports that
we file with the SEC and the registration statement on Form S-4
filed by Snyder's-Lance on November 25, 2015. Many of our
forward-looking statements include discussions of trends and
anticipated developments under the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of the periodic reports that we file with the
SEC. We use the words "anticipate," "believe," "estimate,"
"expect," "intend," "plan," "seek," "may" and other similar
expressions to identify forward-looking statements that discuss our
future expectations, contain projections of our results of
operations or financial condition or state other "forward-looking"
information. You also should carefully consider other cautionary
statements elsewhere in this press release and in other documents
we file from time to time with the SEC. We do not undertake
any obligation to update forward-looking statements to reflect
events or circumstances occurring after the date of this press
release.
Additional Information and Where to Find it
In connection with the proposed transaction between Diamond
Foods, Inc. ("Diamond Foods") and Snyder's-Lance, Inc.
("Snyder's-Lance"), Snyder's-Lance filed a registration statement
on Form S-4 with the SEC on November 25, 2015 (the "Registration
Statement"), which includes a joint proxy statement/prospectus and
relevant materials concerning the proposed transaction relating to
the solicitation of proxies to vote at the respective special
meeting of stockholders of Diamond Foods and Snyder's-Lance to
approve the proposed transaction. The definitive proxy statement
will be mailed to the stockholders of the Company in advance of the
special meeting. STOCKHOLDERS OF DIAMOND FOODS AND SNYDER'S-LANCE
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to obtain
the documents free of charge at the SEC's web site,
http://www.sec.gov. Documents will also be available for free from
Diamond Foods at www.diamondfoods.com and from Snyder's-Lance's at
www.snyderslance.com.
Diamond Foods, Snyder's-Lance and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies with respect of the proposed transaction.
Information about the directors and executive officers of Diamond
Foods, including their holdings of securities of Diamond Foods, is
set forth in the joint proxy statement/prospectus included in the
Registration Statement and in the Diamond Foods Amendment No. 1 to
Annual Report on Form 10-K that was filed with the SEC on November
24, 2015. Information about the directors and executive officers of
Snyder's-Lance is set forth in the joint proxy statement/prospectus
included in the Registration Statement and the proxy statement for
Snyder's-Lance's 2015 Annual Meeting of Stockholders, which was
filed with the SEC on April 1, 2015 and its Current Report on Form
8-K filed with the SEC on October 1, 2015. Investors may obtain
additional information regarding the interests of such participants
by reading the definitive joint proxy statement/prospectus
regarding the proposed merger when it becomes available. These
documents can be obtained free of charge from the sources indicated
above.
Financial
Summary |
|
Summarized Statements of
Operations: |
|
|
|
|
Three
Months Ended October 31, |
|
2015 |
2014 |
Net sales |
$ 224,849 |
$ 246,621 |
Cost of sales |
163,970 |
187,231 |
Gross profit |
60,879 |
59,390 |
Operating expenses: |
|
|
Selling, general and administrative |
30,607 |
28,582 |
Advertising |
11,886 |
11,816 |
Total operating expenses |
42,493 |
40,398 |
Income from operations |
18,386 |
18,992 |
Interest expense, net |
10,026 |
10,236 |
Other income, net |
(22) |
— |
Income before income taxes |
8,338 |
8,756 |
Income taxes |
559 |
1,062 |
Net income |
$ 7,779 |
$ 7,694 |
|
|
|
Earnings per share: |
|
|
Basic |
$ 0.25 |
$ 0.25 |
Diluted |
$ 0.24 |
$ 0.24 |
Shares used to compute earnings per
share: |
|
|
Basic |
31,279 |
31,042 |
Diluted |
31,870 |
31,468 |
|
Segment
Information: |
|
|
|
|
Three Months
Ended October 31, |
% Change
from |
|
2015 |
2014 |
2014 to 2015 |
Net sales |
|
|
|
Snacks |
$ 115,799 |
$ 116,590 |
(0.7)% |
Nuts |
109,050 |
130,031 |
(16.1)% |
Total |
$ 224,849 |
$ 246,621 |
(8.8)% |
Gross
profit |
|
|
|
Snacks |
$ 42,307 |
$ 42,956 |
(1.5)% |
Nuts |
18,572 |
16,434 |
13.0% |
Total |
$ 60,879 |
$ 59,390 |
2.5% |
|
Summarized Balance Sheets
Data: |
|
October
31, |
|
2015 |
2014 |
ASSETS |
|
|
Total current assets |
$ 353,194 |
$ 403,323 |
Equity method investment |
1,942 |
— |
Property, plant and equipment, net |
141,599 |
132,997 |
Goodwill |
402,412 |
405,113 |
Other intangible assets, net |
372,181 |
383,874 |
Other long-term assets |
10,454 |
13,104 |
Total assets |
$1,281,782 |
$1,338,411 |
LIABILITIES AND STOCKHOLDER'S
EQUITY |
|
|
Total current liabilities |
$ 205,348 |
$ 287,099 |
Long-term obligations, net |
627,130 |
636,289 |
Deferred income taxes |
115,886 |
112,871 |
Other liabilities |
18,683 |
21,563 |
Total stockholders' equity |
314,735 |
280,589 |
Total liabilities and stockholders'
equity |
$1,281,782 |
$1,338,411 |
|
|
Non-GAAP Financial
Information |
|
|
|
Reconciliation of Net
Income to Non-GAAP EPS and Income Before Income Taxes to Non-GAAP
EPS: |
|
|
|
|
Three Months
Ended October 31, |
|
2015 |
2014 |
Net income |
$ 7,779 |
$ 7,694 |
Income taxes |
559 |
1,062 |
Income before income taxes |
8,338 |
8,756 |
Amortization of deferred financing costs
and discounts |
1,479 |
1,452 |
Certain legal expenses |
— |
1,831 |
Litigation settlement reserve and related
legal expenses |
25 |
161 |
Fishers plant closure and related
costs |
219 |
382 |
Certain expenses associated with the
Emerald brand packaging transition |
(228) |
— |
Merger and acquisition related
transaction costs |
2,918 |
— |
Idle equipment impairment |
— |
244 |
Other SG&A adjustments (1) |
1 |
(141) |
Non-GAAP income before income taxes |
12,752 |
12,685 |
GAAP income taxes |
559 |
1,062 |
Adjustments to GAAP income taxes |
3,380 |
2,720 |
Non-GAAP income taxes (benefit) (2) |
3,939 |
3,782 |
Non-GAAP net income |
$ 8,813 |
$ 8,903 |
|
|
|
Non-GAAP EPS-diluted |
|
|
Non-GAAP EPS-diluted |
$ 0.28 |
$ 0.28 |
Shares used in computing Non-GAAP |
31,870 |
31,807 |
|
|
|
(1) Represents U.K.
compensation alignment benefit and foreign distributor exit
benefit. |
|
|
|
(2) The GAAP tax rate was
6.7% for the first quarter fiscal 2015 and the Non-GAAP tax rate
was 30.9%. The difference between the GAAP and Non-GAAP rates is
primarily caused by the valuation allowance against tax net
operating losses which arose from costs, principally legal and
accounting expenses related to the earnings restatement in fiscal
2012, that we did not recognize in Non-GAAP income but were
recognized for GAAP purposes. |
|
|
|
Reconciliation of Net
Income to Adjusted EBITDA: |
|
|
|
|
Three
Months Ended October 31, |
|
2015 |
2014 |
Net income |
$ 7,779 |
$ 7,694 |
Income taxes |
559 |
1,062 |
Interest in income of equity investee,
net |
(85) |
— |
Interest expense, net |
10,026 |
10,236 |
Certain legal expenses |
— |
1,831 |
Litigation settlement reserve and related
legal expenses |
25 |
161 |
Fishers plant closure and related
costs |
219 |
382 |
Certain expenses associated with the
Emerald brand packaging transition |
(228) |
— |
Merger and acquisition related
transaction costs |
2,918 |
— |
Idle equipment impairment |
— |
244 |
Other SG&A adjustments (1) |
1 |
(141) |
Stock-based compensation expense |
2,162 |
1,981 |
Depreciation and amortization
expense |
7,042 |
7,277 |
Adjusted EBITDA |
$ 30,418 |
$ 30,727 |
|
|
|
(1) Represents U.K.
compensation alignment benefit and foreign distributor exit
benefit. |
|
|
|
Reconciliation of GAAP
Selling, general and administrative ("SG&A") expenses to
Adjusted Selling, general and administrative
expenses: |
|
|
|
|
Three
Months Ended October 31, |
|
2015 |
2014 |
SG&A |
$ 30,607 |
$ 28,582 |
Less: |
|
|
Certain legal expenses |
— |
1,831 |
Litigation settlement reserve and related
legal expenses |
25 |
161 |
Fishers plant closure and related
costs |
219 |
382 |
Merger and acquisition related
transaction costs |
2,918 |
— |
Idle equipment impairment |
— |
244 |
Other SG&A adjustments(1) |
1 |
(141) |
Adjusted SG&A |
$ 27,444 |
$ 26,105 |
|
|
|
(1) Represents U.K.
compensation alignment benefit and foreign distributor exit
benefit. |
About Diamond's Non-GAAP Financial Measures
This release contains non-GAAP financial measures of Diamond's
performance ("non-GAAP measures") for different periods. Non-GAAP
financial measures should not be considered as a substitute for
financial measures prepared in accordance with GAAP. Diamond's
non-GAAP financial measures do not reflect a comprehensive system
of accounting principles, and differ both from GAAP financial
measures and from non-GAAP financial measures used by other
companies. Diamond urges investors to review its reconciliation of
non-GAAP financial measures to the most directly comparable GAAP
financial measures, and its GAAP financial statements generally to
evaluate its business.
Diamond believes that its non-GAAP financial measures provide
meaningful information to investors because they allow investors to
view the business through the eyes of management. Diamond believes
that its non-GAAP financial measures provide meaningful
supplemental information regarding Diamond's operating results
because they exclude amounts that Diamond excludes when monitoring
operating results and assessing the performance of Diamond's
business. Diamond believes that its non-GAAP financial measures
also facilitate comparison of its results for current periods with
historical periods, and with its business outlook for future
periods.
Non-GAAP net income, non-GAAP diluted earnings per share, and
adjusted EBITDA are used by management as core measures of
Diamond's operating performance. For Diamond, non-GAAP net income
and non-GAAP diluted earnings per share reflect adjustments to
eliminate the effect of amortization of deferred financing costs
and discounts; legal expenses primarily related to audit committee
investigation and restatement and related matters; litigation
settlement reserve and related legal expenses; Fishers plant
closure and related costs; certain expenses associated with the
Emerald brand packaging transition relating to the conversion from
canisters to small bags; merger and acquisition related transaction
expenses, primarily related to the proposed Snyder's-Lance merger;
asset impairment on idle equipment; and expense related to U.K.
compensation alignment benefit, and foreign distributor exit
benefit included in SG&A. Adjusted EBITDA comprises net income
plus interest expense, income taxes, depreciation, amortization,
and stock-based compensation, excludes income associated with the
equity investment and also reflects the aforementioned adjustments
(other than amortization of deferred financing costs and discounts,
which is included in interest expense). Adjusted SG&A reflects
adjustments to Selling, general and administrative costs to
eliminate the impact of the aforementioned adjustments to income
(other than amortization of deferred financing costs and discounts,
and certain expenses associated with the Emerald brand packaging
transition relating to the conversion from canisters to small bags,
which are not in SG&A). We believe that non-GAAP net income,
non-GAAP diluted EPS, adjusted EBITDA and adjusted SG&A are
useful indicators of Diamond's ongoing operating performance. As a
result, Diamond management reports feature these non-GAAP financial
measures in conjunction with traditional GAAP measures, as part of
our overall assessment of company performance.
Diamond's management uses these non-GAAP financial measures in
internal reports used to monitor and make decisions about its
business, such as monthly financial reports prepared for management
and quarterly reports to Diamond's Board of Directors. The
principal limitation of the non-GAAP measures is that they exclude
significant expenses that are required under GAAP to be recorded.
They also reflect the exercise of management's judgments about
which charges are excluded from the non-GAAP financial measures.
Consequently, these non-GAAP measures should not be considered in
isolation or as alternatives to GAAP measures. Diamond urges
investors to review the reconciliations of these non-GAAP financial
measures to the comparable GAAP financial measures included in this
press release, and recommends that investors do not give undue
weight to the non-GAAP financial measures or rely on any single
financial measure to evaluate our business.
CONTACT: Investors:
ICR
Katie Turner
415-230-7952
Media:
ICR
Anton Nicholas/Jessica Liddell
415-445-7431
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